Installment loans using the simple interest method
A)have the highest finance charges of any method.
B)have interest charged only on the monthly loan balance.
C)do not have balloon payments.
D)have a lower APR than the stated interest rate.
E)have a higher APR than the stated interest rate.

Question

Quizplus · Accepted Answer

Installment loans using the simple interest method have interest charged only on the monthly loan balance, which means that the finance charges will be lower compared to other methods such as pre-computed or add-on interest loans. This also means that there are no balloon payments or lump sum payments required at the end of the loan term. However, the APR (Annual Percentage Rate) may be higher than the stated interest rate, as it takes into account any fees or charges associated with the loan.

Installment Loans Using the Simple Interest Method